A month-on-month increase in corporate insolvency numbers could be an indication that the tide is beginning to turn against Britain’s struggling businesses.
That’s the view of Alexandra Withers, North East chair of insolvency and restructuring trade body R3, after official figures revealed a four percent month-on-month increase in the number of corporate insolvencies across the UK.
According to the Insolvency Service, there were 889 corporate insolvencies during November, compared to 862 in October, with the increase being driven by a rise in Creditors Voluntary Liquidations (CVLs).
Last month’s figure is, however, 41% lower than the 1,512 cases in November 2019.
Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, says: “Despite the small monthly increase in overall corporate insolvencies, the statistics published today are not an accurate reflection of the state of the economy or the state of the regional business community.
“Businesses from Berwick to Blyth and Barnard Castle are being affected by Covid-19 and the main reason this hasn’t shown up in the insolvency statistics yet is because of the extensive support the Government has provided. Without it, we’d be in a very different situation – and a very grave one at that.
“A good festive trading period has never been more important, and the extension of the furlough scheme and the temporary ban on winding-up petitions until the end of March will provide some reassurance to many businesses and their staff as we go into the Christmas period and on to the first quarter of 2021.
“However, the North East’s Tier Three designation, the impact of repeated stop-start closures in many sectors and the disruption to usual pre-Christmas activities and events, if they’re going ahead at all, mean that many regional firms will be facing a cold start to the new year.”
Alexandra Withers also believes the continuing uncertainty around the UK/EU trade agreement negotiations will increase the pressure on the regional economy due to its status as a net exporter with strong links to continental Europe.
She continues: “The effect of the various regional restrictions remains to be seen, and questions endure about the Government’s strategy for eventually winding down its packages of support and what will happen to those benefiting from these measures once they end.
“Against this backdrop, and with the clock ticking, continued uncertainty around the UK’s future trading relationship with the EU is one especially pressing issue that many already struggling regional firms could do without.
“As we approach the end of a tumultuous year, it becomes even more critical that company directors and individuals seek advice from a qualified source as soon as they see signs their business or their personal finances are starting to struggle.
“The earlier they seek advice, the more options they have to resolve their situation, and the more time they have to take a considered decision about how they move forward.”